James Packer ... plans to build a premium hotel and high-roller casino. Photo: Eddie Jim
The public could be ''fleeced'' of up to $120 million if the O'Farrell government approves James Packer's casino resort without demanding an increased payment to develop harbour-front Barangaroo.
Infrastructure industry sources said taxpayers were likely to be short-changed in the emerging deal between the government and construction giant Lend Lease and James Packer's Crown Ltd.
Mr Packer plans to build a premium hotel and high-roller casino and has the provisional blessing of the Premier, Barry O'Farrell. Critics say the project would add hundreds of millions of dollars in value to the $6 billion development, arguing this should be reflected in a higher return to the state.
There is concern the public would lose out if there was no tender process for a second casino licence.
Under the terms of the 2009 contract won by Lend Lease, the envisaged hotel was a smaller part of the overall plan, which included a series of giant office blocks.
At 33,000 square metres, or about 30 storeys, the hotel had an estimated value of $800 a square metre. The value of the land rights to the government was about $30 million.
But the prospect of a second casino licence has changed the complexion and dimensions of the project.
Under his ''unsolicited proposal'', which has the backing of the O'Farrell cabinet, Mr Packer's gambling resort now appears to be between 60,000 and 80,000 square metres, or up to 70 storeys.
The six-star hotel would have a conservative value of $2000 a square metre, according to two property industry experts last week. On that basis, the cut for government in development rights should be between $120 million and $160 million, compared with the $30 million under the previous proposal.
One infrastructure source, who declined to be named, said: ''It's an absolute bonanza for Lend Lease. The question the taxpayer should be asking is how much more the Barangaroo Development Authority will ask for this change in the development rights down there? Or if they are going to ask for money at all?''
Lend Lease did not answer questions from The Sun-Herald, instead issuing a statement: ''Lend Lease's vision for Barangaroo South is to have a high quality international hotel. Our partnership with Crown is a great step in achieving that goal. Any discussion of a gaming licence is a matter for Crown and the NSW Government." A spokesman for Mr O'Farrell also declined to address questions, saying approval had not been granted for a hotel on land at Barangaroo.
Details of what Lend Lease is paying to develop the site remain scarce. In 2009, the company announced to the stock exchange it had agreed to a ''series of payments totalling several hundred million dollars to the state over eight years''. The company said it would pay $100 million over the first 18 months of the project.
A property source said Lend Lease would have a strong case with state government not to increase its contribution, having backed away from building a building over the water. Lend Lease has binding approval to build a ''floating'' hotel over the water but agreed to relocate it to the land in the face of opposition and the urging of Mr O'Farrell.
Citigroup has estimated a Sydney casino would add $300 million to $400 million to the coffers of Crown each year from 2019, when the exclusivity of Echo Entertainment's casino licence for the Star runs out.
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